ASK Automotive (NSE:ASKAUTOLTD) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to ASK Automotive Q2 and H1 FY 'twenty seven Post Results Earnings Conference Call hosted by AdFactors As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please signal an operator by pressing 100 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to mister from AdFactors PR. Thank you, and over to you, sir. Thank you, Palak. A very good evening to everyone, and welcome to the q two and h one FY twenty seven earnings call of ASK Automotive. From the senior management, we have with us mister Kulip Singh Rathi, chairman and managing director, Mr. Prashanth Rathi, Joint Managing Director Mr. Aman Rathi, Joint Managing Director Mr.

1:05 Naresh Kumar, Chief Financial Officer and Mr. Manoj Sharma, Chief General Manager, Investor Relations. Before we begin the earnings call, I would like to mention that some of the statements made during today's call may be forward looking in nature and hence may involve risks and uncertainties, including those related to future financials and operating performance of the company. Please bear with us. If there is a call drop during the course of the conference call, we would like we would ensure that the call is reconnected at the earliest. I would now like to hand over the call to Mr. Kudip Singh Rati, Chairman and Managing Director, for his opening remarks. Thank you, and over to you, sir. Good evening, ladies and gentlemen. It is my great pleasure to welcome you all to our Q2 and H1 FY 'twenty seven earnings conference call.

1:56 I hope you have had the opportunity to review the detailed presentation submitted to the exchanges and available on our website. FY 'twenty seven has begun on a resilient note for the Indian economy, with GDP growing 7.8% in the first quarter ahead of expectations, supported by strong investment and steady consumption. The GST 2.0 reforms have helped improve affordability across vehicle segments. The Indian automobile sector delivered a strong first half of FY twenty twenty seven with every segment recording its highest ever second quarter domestic sales.

2:43 Now let me begin by sharing a quick overview of the broader industry as reported by CF. In H1 FY twenty twenty seven, overall vehicle production across all segments registered a robust year on year growth of 20.3%. The two wheeler segment, which is most relevant to us, recorded domestic production of 153.7 lakh units in H1 FY 'twenty seven, up 19.5% from 128.6 lakh units in H1 FY 'twenty six. In Q2 alone, production touched 81 lakh units as compared to 69.5 lakh units in the same quarter last year.

3:34 The festive season is under big, consumer sentiment is improving, and we expect further support from the eighth Pay Commission, new border launches and a gradual replacement cycle. Moving on to business updates. I'm delighted to share with you that we had a strong performance in the second quarter and the first half in both revenue and profitability. This is the twelfth consecutive quarter of robust performance of us since listing of the company. Happy to share that we have achieved highest ever quarterly revenue, EBITDA and PAT. During Q2 FY 'twenty seven, we delivered strong performance in business and recorded consolidated revenue growth of 47.5%.

4:30 When we see excluding pass through impact of significant increase in alloy prices on revenue, which is 23% and wheel assembly business strategic reduction, which is 5%. So overall net revenue has grown by 29.5% on year on year basis. We continue to outperform the two wheeler industry, achieving net revenue growth of 29.5% compared with industry vehicle production growth of 16.5%. Achieved EBITDA of INR 185 crore with 30% year on year growth. EBITDA margin at 11.8%.

5:18 However, EBITDA margin percentage appears lower due to pass through alloy prices. Achieved PAT of INR102 crores with 27.3% year on year growth. With strong performance, our earnings per share has increased to INR5.15 per share against INR4.05 per share in the last year same period. Our all three product segments performed well in terms of revenue growth. Revenue from Advanced Baking System grew by 46% year on year, while aluminum light weighting precision solutions and safety control cables recorded revenue growth of 6933%, respectively.

6:10 Export revenue rose by 133.3% year on year to INR70 crore compared with INR30 crore in the corresponding period last year. As a result, in first half of FY 'twenty seven, we delivered strong performance in business and recorded consolidated revenue growth of 49.6%. So when we exclude the pass through impact of significant increase in alloy prices on revenue, which is 27.1% and wheel assembly business strategy reduction, which is 5.1%. So overall, net revenue has grown by 27.6 on a year on year basis. We achieved EBITDA of INR $3.48 crore with 31.3% year on year growth.

7:02 EBITDA margin at 11.9%. However, EBITDA percentage lower due to pass through alloy prices, achieved PAT of INR 187 crores with 28% year on year growth. Adink per share increased to INR 9.47 against INR 7.40 in the last year in the same period, up 28% year on year. Our all three product segments performed well in H1 FY 'twenty seven in terms of revenue growth. Revenue from Advanced Pacing System grew by 47% year on year, while aluminum light weighting precision solutions and safety control cables recorded revenue growth of 7227%, respectively.

7:53 Export revenues rose by 74 year on year to INR 109 crore compared with INR 63 crore in the corresponding period last year. This reflects the result of our continued focus on expanding value added businesses, improving utilization of production capacities and bringing cost efficiencies. We continue to outperform the two wheeler industry, achieving net revenue growth of 27.6% compared with industry weaker production growth of 19.5%. Our aim is to continue on this growth path on a sustainable basis with clear focus on the bottom line to enhance the shareholders' win.

8:45 Volatility in alloy prices may affect margin percentages due to the denominator effect. However, in absolute terms, our EBITDA growth is in line with the debt revenue growth. There are certain key updates, which I would like to highlight. Regular supply of high pressure die casted, HPDC alloy wheels commenced on third August twenty twenty six to our leading Japanese customer under technical collaboration with Ryushu Yanagawa Japan. First time, HPDC alloy wheels introduced in two wheelers in India. Our second captive solar plant of 11.55 megawatts at Bikade, Rajasthan operationalized in October 26, as promised earlier.

9:39 This reflects ASK's special focus on green energy. In spite of the current geopolitical situation, we are confident that we'll continue to grow in high teens in FY 'twenty seven despite post GST 2.0 higher base in Q3 and Q4 of FY 'twenty six. Thank you very much for your patient hearing. With this, we leave the floor open for question Anyone who wishes to ask a question may please press star and 1 on their touch tone telephone.

10:26 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. The first question is from the line of from Nuvama Research. Please proceed with your question. Congratulations to the entire team on the stellar performance across all categories. Sir, just a clarification to start with. When you indicate that high single digit growth I mean, high teens growth for the full year, you are looking at revenue excluding the pass through alloy impact. Would that be right?

11:13 Yes, yes. Net revenue. We always mention very transparently that what is the net revenue growth, Mr. Agarwal. Thank you, sir. Export revenue is at INR100 crores in H1. Would you see similar run rate for H2? And also, has there been any new order wins in export, either in auto or non auto categories? See, we are very, very efficient even in H2. But the only thing is any analyst scare us by telling that H2, you will see much lesser growth because of the GSP 20 impact, which you know, there was a clear upside in the H1.

12:00 But since last end of H1, September, GSP 20 direction came. So the analyst feel the H2 will be less. However, we are very confident that all our customers are also very bullish on H2. Yes, sir. I was asking on exports, sir, whether in exports, have you seen any new order wins? And for full year, do you think exports revenue can cross INR 200 crore of revenue? As per time, we had given a guidance of that we'll be from INR 145 crores, we'll touch INR 180 crores, and we are very confident we'll be crossing that. Got it, sir. And can you provide an update on the supply like on alloy deals, how is the ramp up expected for Japanese and India OEM?

12:58 And also, if you can update on the port order and the sunroof cable order, whether all these orders are on track and what kind of revenue we can expect for FY 'twenty seven and 'twenty eight? As far as the Japanese customer is concerned on the alloy wheel side, From August 3, since we started the commercial production, the supplies are going regularly on daily basis every month. And this year, we'll be able to supply, as I had mentioned earlier, about INR 80 crores on the alloy wheels. And next year, the orders are up to the tune of INR $2.40 crores. That is only with one customer.

13:45 As regards to the other Indian customer, the as I mentioned, this is in the final as far as being a safety item, it is in the final stages of the testing. And once that breakthrough comes, so that additional supplies will come only in the next financial year. Regarding the yes, sorry? And what can be the potential, sir, for the Indian customer? Raghunathan, sir, may we request that you return to question queue and follow-up follow-up? Sure. I will do that. Thank you. Yeah. Thank you, sir. The next question is from the line of Ronak Mehta from ICICI Securities. Please proceed with your question.

14:34 Thank you for the opportunity. Congratulations, sir, for the great set of numbers. So continuing on the question from the previous participant on alloy wheels. Now that the product is already on road, what is the initial feedback from the customer, Japanese customer? And how do how are they planning to and can you also throw some light on the profitability of Alohi once it's ramped up fully? Will it be similar to the profitability of the overall company profitability currently? Or it will be lower or higher? If you can throw some light on that. See, Mr. Ranit, that this supplies are going regularly.

15:20 There is a feedback from the market is very, very positive. And as I said, there'll be continuous ramp up and continuous supplies in the next full year to the tune of INR240 crores in the next financial year to only one customer, which is a Japanese customer. So as regards the EBITDA margins, you know, we are very focused on the bottom line. So EBITDA margins will remain in sync with the company's EBITDA margins. Okay, sir. And my second question is on the CapEx. You help us with the CapEx guidance for this year and next year? Yes. CapEx, we are continuously doing. As I said, I am very positive on the performance of the company, performance of that nation.

16:09 And I'm always optimistic in every call, as you must have seen. So we are continuing with our CapEx. And very, very happy to share with you that we have commissioned our nineteenth plant for the expansion in the friction material, the brakes. And twentieth plant will be commissioning very soon and on likely on January 14 or January 15. And because that plant will be the twentieth plant will be the fourth plant of Bangalore, there are so many orders coming from the South customers. And also the previous plant, which we had put with an investment of about approximately INR380 crores that is now running on full capacity of 90% capacity utilization.

17:11 So any CapEx number for this year or for the full year? This year, we have already budgeted INR700 crores. But of course, some part of it may if the machines come on, say, seventh April, this may go little it will be around this number, but some we are going on an expansion path, complete expansion path. And even next year, we'll be putting in INR500 crores further. Okay, sir. Thank you. Thank you, sir. Thank you, sir. The next question is from the line of from Bank. Please proceed with your question. Good evening, sir. Thank you for the opportunity.

17:57 My first question is on the export revenue. Like, I'm seeing in the h one, the export has grown by 75%. And at the starting of the year, you guided around 20% growth for export. So any revision in the guidance for the H2 for the year? So at that moment, we'll stick to our guidance, but we'll definitely we are very confident that we'll be crossing the 180 crores guidelines that we had given. Because I can't say with certainty because of the geopolitical situation. But under the circumstances, we are doing pretty well. My second question is on ALPS segment. It has been around 70% Y on Y in And 250 how is the ASK EV business going relative to overall two wheeler in the fee in this segment? And what is the current EV contribution to ASK revenue segment EV?

18:56 EV segment. EV also we are performing. We have grown in EV, we have grown by 98%. Okay. And sir, like like, Honda is expanding capacity and launching 10 new models next year. So how is our content per vehicle and overall wallet share in the customer versus, like, other customers? And how is Honda's EV ramping ramp up plan going on? See, we are associated with Honda in all the models. So we will be growing as per the growth of the vehicles in Honda. I can only explain that. And second thing is... And as we always say, our content is slightly higher. Yes. Our content is slightly higher only, not lower in Honda.

19:49 Honda being our the leading customer, it still enjoys about, I think, 35% of our total revenues. Okay. Also, like company discussed about the independent aftermarket channel as a key growth strategy. So what has been the progress in expanding the distribution network and product portfolio? And what is the current contribution of aftermarket revenue and growth expectation for midterm? Our aftermarket is growing as per the growth of the company and it generally outgrows the brake segment. And it normally of the overall revenue, it constitutes about 11%.

20:36 So one last question on the margin guidance that you expect margins to interrupt around 13.14%. So if we remove the impact of aluminum prices, so what was adjusted margin for Q2 and where we are in terms of the guidance? We are maintaining what I suggested because if you adjust the aluminum, abrupt aluminum prices, our margins will come to 13.5% or little more. Sir. Thank you. That's it from me. Because I repeatedly, I've said it's a denominator effect. Tomorrow, aluminum prices, everything gets sorted out geopolitically and aluminum prices fall, then you will suddenly see our EBITDA percentages.

21:25 So that's why I say we should see the growth in the absolute EBITDA. Okay. Yes. Sure, sir. Thank you. And the absolute EBITDA has grown by 20 by 30%. So basically, our EBITDA growth is in line with overall revenue revenues and like Yes. So See, better percentages actually, repeatedly, in every call, I say it doesn't matter the percentage. But the good part is that we have grown as per the line of the growth of the net revenue, whatever we always tell you. Thank you, sir.

22:16 The next question is from the line of Navin Kumar Dubhe from Financial Services Limited. Please proceed with your question. Yeah. Thanks for the opportunity, sir, and congratulations to the team for robust performance. My first question is related to the industry, sir. How should we expect the auto industry to pan out in FY twenty twenty after showing strong growth in FY twenty twenty seven? And are we expecting that industry might be peaking around in FY twenty twenty eight? Yes, I can't forecast that, but the customers are at the moment very bullish. I can only say that they are all expanding capacities.

23:03 We expand our capacities along with that being our we being the core supplier. And well, if you if we feel that the industry will keep on going 20%, so it will not grow. So it will come to reasonable terms, but I think it should still grow at 10%. The industry should grow at 10%. Okay. Because this year, sir, I think the industry would be doing somewhere around 24,000,000 what I'm saying. But see, we should appreciate that whole economy, there's a lot of money coming in the circulating in the economy. And I think the demand for two wheelers shall remain.

23:54 Since the second question is related to us, what are the key drivers behind the kind of growth that we are seeing? Is it because of new OEMs we are adding or we are gaining market share or it is because of increased premium offerings? What could be the driver? See, we have been what we have been doing for the last thirty years. Last thirty years, we have been outgrowing the growth of the industry, and there is no specific formula. But yes, some new customers, some new products, some new share. So I think this is the basic common formula that since we are working hard, the customers are happy. So we are getting extra orders wherever they need to be.

24:49 Sir, one question related to the EV industry. What kind of EV adoption we are expecting in maybe in FY 'twenty eight because that is the very fast growing segment currently? I think EV will soon not soon, means another next two years, it should enjoy 20% of the total market churn. Okay. That's a big number, 20%. Yes. But it may take two years, two financial years further. Okay. Sir Sorry to interrupt, Navin, sir. May we request that you return to question to follow-up? Sure. Sure. Sure. Yeah. Thank you, sir. Next question is from the line of from CLSA.

25:35 Please proceed with your question. Yeah. Hi, thanks. Congrats, Aditi, for good set of numbers and happy devaluing at heart. So one thing, just the extension of the previous question, with the two wheeler industry EV penetration at 10%, currently, how much is the EV product revenue mix for Q? And as of now, how much is the key value difference between EV and ICE? See, the key value is higher in EV rather than ICE. But at the moment, our EV revenue is 5.9% because we are growing in the other segments.

26:21 And plus one of our main customers, initial main customer, Ola, is as everybody knows, is not doing that well at the moment. But however, we have taken the big breakthroughs in the other EV customers, and this will keep on growing. And sir, as of now, what can be the multiplier of each value per unit between the EV and ICE you are catering to? See EV in ICE, our kits value is about $9.50. EV is about $12.50 or 1,300. So the kit value is higher in EV. This is for the braking system you mentioned? No, no. This is for overall, overall, including ALPS.

27:08 So 1.3 x, 1.4 x, right? Yes, yes, yes. So we'll mainly Yes. We'll gain once this EV transition takes place. Ultimately, we are going to gain. Sure. Because as you said, from 10% penetration moving up to 20% in two years, I And it takes slight because we can give you a feedback what customers are thinking. So they are thinking the transition will be faster now because of environmental reasons and so many other things. And currently, you are catering to all the key EV makers like Bajaj, TPS, HR, Hero? We are catering to Ola, Ether, TVS and Bajaj a little bit. Bajaj, we are less, but we are catering to Bajaj and then Hero.

28:07 And the. Sorry to interrupt, Your voice is not clear. Hello? Hello? Sir, may we request that you come to follow-up follow-up as your voice is not audible. Thank you. Thank you. Thank you, sir. The next question is from the line of Preeti Sharma from Invest First Advisors. Please proceed with your question. Hi. Congratulations on a great set of numbers, sir. I have two questions. One is with, you know, with the two wheeler ICE contribution, around 73% of of yearly revenue, how do you see the revenue mix evolving over the next two to three years, especially across EVs, passenger vehicles, and commercial vehicles?

29:01 My second sorry. Question Sir, can go ahead. No, no. No. You please ask. Yeah. Sorry. And my second question was since the company has started regular supplies of HTDC alloy wheels since August 26. What is the expected revenue from this product? And are there opportunities to supply to OEMs in India and overseas? Well, regarding the first question that the ICE revenue and the EV revenue, probably the EV revenue will keep on little bit increasing and ICE revenue similarly coming little down. That's because the overall population of the two meters is also increasing. There is a huge growth in that segment. That's right.

29:49 So that is the first thing. And the second thing is on the HPC alloy wheels, they will be first supplied only to the Indian OEMs as we have tracked one OEM in the Japanese OEM. So we expect there should be next financial year breakthrough in the other Indian OEMs also. And as far as export is concerned, that's a late consideration because there is a there should be a very good demand in the Indian OEMs only. Okay, great. Thank you so much, sir. That's it from my side. All the best. You. Thank you, ma'am. The next question is from the line of Varun from Smiths Limited PMF. Please proceed with your question.

30:39 Yeah. Hi. Am I audible? Am audible? Yes, sir. Yes, sir. Yeah. First of all, congratulations for a very great set of numbers set numbers. I have a question on on the debt part. Basically, I understand that we are doing 700 crores of CapEx this year and another additional 500 crores next year. So sir, what would be the peak debt for you and how are you going to get the repayment done? See, we are a cash generating company for the last thirty two years. And this year also so much of CapEx we are doing from the internal accrual. And all the cash that we are generating that is re flowed into the company.

31:27 So repayment of the debt is no question at all because our debt equity ratio always remains around 0.5, which is very well controlled. And even the debt EBITDA, we would like to keep around one year of EBITDA only. So with these kinds of fiscal management, I think debt repayment or the debt figure, it is or should be of no concern. Okay. That's assuring, sir. And my second question was with respect to, sir, what is the margin on the SPDC versus the ALPS currently? And is that what the spread like looking in that segment? Our EBITDA margins are very, very close in each of the segments.

32:18 You would suggest that they are even like they both are the same? Yeah. Yeah. Same. Okay. Yeah. That's it from my side, sir. Thank you so much. So much. And happy Diwali. Happy Diwali. Happy Diwali to everyone. Thank you, sir. The next question is from the line of Yash Agarwal from. Please proceed with your question. Just a few question on the modeling side. Like, we have seen other expenses in in Q1 now further in the q two. So like will they remain at market profit? What was the answer to your question? You repeat the question? He is asking... We are on the other expenses side, which have gone up in the Q1 then further gone up in the Q2 and they remain a bit elevated. So will they moderate going forward?

33:17 Like any specific thing which is impacting the The major part of the other expenses is contractual labor charges that was increased due to increase in minimum wages in Haryana and other states. Okay. First, think CFO is telling that, that is because of the huge wage increase of 35% in this Haryana region. And sir, the share of ASK in the first half, so are we expecting them to improve going forward or like...

34:11 Can you repeat again? It's not clear. Yes. Sir, your voice is not audible. Can you come back in a question queue? Sure. Sure. Sure. Yes. The next question is from the line of Harshil from CPA Advisory. Please proceed with your question. Everyone. Am I audible? Yes. Yes, please. Yes. So I have two questions. Firstly, actually, I had joined a bit late, so I might have missed it. So on the ALPS growth, I have seen you have significantly outperformed the other segments as well by around 69% in Q2 and 72% in H1. So I actually wanted to understand what were the key drivers of this growth?

35:05 And if you can give some clarity on how much of this is coming from the new customer additions and vis a vis the higher businesses from the existing customers? So this is some as you know, many of the OEM customers are outgrowing the industry. So we are very well associated with them and moving hand in hand with them. So anybody who has the capacities will get the business. And as you have been noticing that we have been investing on an average at least INR 500 crores for the last four years continuously and re growing our profits in the business. So we are keeping the advantages of that. Understood, sir. And secondly, I wanted to understand as the company continues to invest in the new facilities, what are the internal cash generation and the funding plans for the upcoming CapEx cycle?

36:10 So I think you should make out that once our EBITDA is half yearly EBITDA numbers are $3.48 crores. So there is enough cash generation. Okay. Understood, sir. That was helpful. Thank you so much, and a very happy Diwali to you. Happy Diwali. Thank you, Ladies and gentlemen, to ask a question, please press star and 1 now. The next question is from the line of Navin Kumar Dubhe from National Financial Services Limited. Please proceed with your question. Yeah. Thanks for the opportunity again, sir.

36:57 How should we think from export perspective? Like, a, from a stand... Industry standpoint and the second from the company industry. So export how can we explain the industry point of view? Can explain our exports. And as I said that our exports will grow more than 25% year on year on an average. So that we are achieving in this year. And even next year, we have the clarity to grow even much faster next year. Think let the time come, I'll give a clear guidance in the next quarter. The industry standpoint, sir, I was asking related to how OEMs are responding to that.

37:49 I mean, how is the export going there? Even the OEMs exports are very good, but on that, even our products are going, but we supply to them locally. So I don't know how much of that is exported, how much is consumed. Okay. So that part, we don't take in our exports because that we supply domestically to them. Sir, one question on a broad basis. Are we thinking of as we are more into two wheeler industry, so how are we thinking of moving towards passenger vehicle? And is there any change in terms of when we pitch ourselves to the OEMs?

38:35 Is there any differentiation between if we pitch to a two wheeler OEM and passenger vehicle OEM? See, in passenger vehicle, we have grown by 79% in this quarter. And overall, also, we have grown in the half year also, we have grown by 67%. So there is a focus. We are growing. And as I said that we are going pretty fast. And until that time, all of our capacities are utilized. All our last investments are totally in profits. So what else we can do? We can I think we are doing pretty well? Yes. Okay, sir. And one bookkeeping question, sir.

39:22 What could be the possible reason behind the increase in trade receivable in the first half? Any particular thing there? Increase in sales as well as increase in aluminum prices. Related to that one. Okay. You. Thank you so much for answering questions, And all the best to the team, and happy Diwali. Happy Diwali. Thank you. Thank you, sir. The next question is from the line of Mandira a from Investo. Please proceed with your question. You for the opportunity. Couple of questions. So what is the margin trajectory should we expect in H2 twenty twenty seven, assuming the aluminum price remains stable?

40:11 The margin trajectory will be the same if the aluminum prices remain high like this. So it is not going to fall. It is going to be a little better only, not all remains the same. Got it. And secondly, EV revenue contribution has increased from 4.8% in H1 twenty twenty six to 5.9% in H1 twenty twenty seven. What is the medium term growth opportunity in EV segment? And which product category are expected to drive this growth? So this is again in line with the industry because EV as a whole percentage of the industry is also growing. So that's why you see the mix there that we have our mix has also changed from 4.8% to 5.9%.

41:04 And some new products also we are adding, Janus. Okay. Got it. Got it. That's really helpful. Thank you, and all the best for the coming quarters. Thank you. Thank you, ma'am. And gentlemen, to ask a question, please press star and 1 now. Participants who wish to ask questions may please press star and 1 at this time. As there are no further questions from the participants, I now hand the conference over to Mr. Kuldeep Singhrati from ASK Automotive Limited for closing comments. Thank you, and over to you, sir.

41:52 Well, ladies and gentlemen, thank you so much for such patient hearing. And before Diwali, we would like to close on a very, very positive note. Whatever we have said for the full year, we are going to achieve. And in my optimistic way, even the next year, financial year looks very, very promising. So on that very happy note and wishing all of you happy Diwali, I would like to close this conference. And namaste and wishing you all good health, happiness and prosperity on this device. Thank you. Thank you, sir. On behalf of AgFactors PR, that concludes this conference call.

42:42 Thank you for joining us, and you may now disconnect your lines. Thank you.